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managing books

Taking Smart Risks

By Doug Sundheim

(McGraw-Hill, 258 pages, $30.95)

Business people are acutely aware of the dangers of taking the wrong risks. They could lose their jobs, or their companies. But Westchester, N.Y.-based consultant Doug Sundheim says they need to hear more about the dangers of avoiding risks and staying in their comfort zone.

"Unfortunately, we rarely hear warnings about playing it safe. We don't see news headlines that say, 'Low risk approach forces local business to file for bankruptcy' or 'Stunningly conservative move pushes global pharmaceutical company to the brink of failure' or 'Man retires after a mediocre career and feels painful remorse for never having laid anything on the line,'" he writes in Taking Smart Risks.

The dangers of playing it safe, he stresses, are silent killers. They are stealthy, developing slowly over time and almost impossible to pinpoint. But like a slow leak in a tire, they can be destructive.

Mr. Sundheim lists five common dangers of playing it safe: You don't win. You don't grow. You don't create. You lose confidence as you lose momentum and start to freeze up, unsure of what to do. You don't feel alive, because you aren't challenging yourself.

"Ultimately what counts the most for your growth and quality of life is figuring out how to get out of your comfort zone on a regular basis," he advises.

But you don't want to plunge directly into the danger zone, taking wild risks. He suggests searching for a middle ground between those two – what he calls the smart-risk zone.

This will involve reframing situations because if you focus on the risks, research shows you will become overly cautious. Instead, focus on what you might lose by not taking the risk – what you don't have because you are prone to staying comfortable.

"Discomfort and uncertainty show up as soon as we engage in the risk. It's a bitter pill to swallow up front in the hopes of a possible, but not guaranteed, benefit down the road," Mr. Sundheim notes. "Conversely, we experience the costs of avoiding risks further down the road. Low growth, lack of accomplishment, and limited fulfilment take time to manifest."

To offset the sense of anxiety, he recommends starting with a cost-benefit analysis. When weighing an issue that involves risk, write down the costs and benefits of taking the risk and the costs and benefits of not taking it. The key item, he suggests, will be your list of the costs of avoiding the risk. That list can turn paralysis into power because it brings future costs into the present for your consideration.

You also must "derisk," removing as much uncertainty as you can at every stage of the process of taking the risk. That reduces uncertainty, lowering fear and increasing effectiveness. "Derisking is what makes risk taking smart," he advises.

Mr. Sundheim has found that smart risk takers consistently take five actions that are helpful to them:

1. They find something worth fighting for

Smart risk takers identify and clarify why risk taking is important. You have to be emotionally committed to something if you will be willing to take the risk.

2. They see the future now

It's important to know where you are going with your risk taking so you can determine critical actions that, if taken now, will increase your odds of success. This happens best through dialogue with colleagues.

3. They act quickly and learn quickly

If you are committed to something, the danger lies in jumping in too deeply and allotting too many resources. Yes, you want to act quickly, but you also want to learn quickly and adjust so you don't waste resources.

4. They are powerful communicators

Poor communication can be particularly problematic in risky situations, as everything can change quickly and small misunderstandings can become magnified. "Smart risk takers assume that communication is going to break down (because it always does) and plan accordingly," he writes.

5. They create a smart-risk culture

Risk taking is rarely an individual endeavour in organizations. It helps if you can build a mindset and culture for taking smart risks. People need to know what smart risks are, and that it's okay to take them and even see a situation turn sour.

When considering taking a risk, you might feel paralyzed and not know how to start. Mr. Sundheim says that's fine – just start, somewhere. Usually you will realize that worrying about starting was much more painful than taking action.

If you have done the research and cost-benefit analysis and decided the risk is reasonable, but are still reluctant to act, he suggests asking yourself two questions: What are the worst things that could happen if you move forward? What is the likelihood of each of those things happening? You'll realize the odds of something catastrophic happening are low.

The five actions Mr. Sundheim discusses aren't particularly novel or inspiring, but his book is valuable for the way he frames the importance of moving out of your comfort zone and for the many practical, sensible tools he offers for gauging and handling risks.


  • Crisis management expert Steven Fink tells you how to manage the message in Crisis Communications (McGraw-Hill, 314 pages, $31.95).
  • Consultant Andrew Savitz shows how to improve your use of human resources in Talent, Transformation and the Triple Bottom Line (Jossey-Bass, 389 pages, $$5.95).
  • Consultant Frank Wander tackles how to use collaboration to create an information technology department that outperforms in Transforming IT Culture (John Wiley, 203 pages, $60).

Special to The Globe and Mail

Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter